Seeking a mandate for climate-related financial disclosures by corporations to investors

In January 2010, the Securities and Exchange Commission (SEC) required corporations to disclose the effects of climate change on corporations and their investors and for this purpose issued guidance and requirements for disclosures related to business and legal developments on climate change. The SEC guidance required to disclose to its business and subsidiaries, information relating to its products and services, environmental information, form of organization and other factors. The SEC, further required registrants to provide information on “significant factors” that make an investment in the registrant speculative or risky or the substantial effects of environmental legislation on the registrant’s  financial condition or operations. With regard to disclosures relating to the effects of climate change on the business itself, the guiding regulations lacked clarity and failed to call for specific details in their publicly filed disclosure documents that could be treated as actionable. Subsequently, the SEC has not taken forward the mandate for climate related financial disclosures intended to protect the interests of investors.

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The choice to resolve environmental disputes through investment arbitration

With growing number of  investment treaties, claims and counterclaims by investors and host states issues of public policy and public interest that include pollution control and natural resources management are also on the rise. As the world witnesses increasing number of incidents of natural disasters affecting climate-vulnerable and poor nations it is imperative that environmental issues take precedence over commercial exploitation of natural resources.    There is no gainsaying that the environmental integrity of a nation is intrinsically linked to economic development of a nation in more ways than what is actually debated on academic platforms.

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